Semiconductors Breakdown; Small Caps Could See Further Losses
Declan Fallon | May 02, 2016 12:09AM ET
Thursday's reversal in the Semiconductor Index was followed on Friday by a breakdown from the consolidation. This will put pressure on the NASDAQ and NASDAQ 100 indices, the latter of which turned net bearish (in technical strength) on significant distribution.
The S&P was able to recover from afternoon selling on a bullish 'hammer'. The index will soon be testing the 50-day MA, which recent 'Golden Cross' with the 200-day MA. Technicals are mixed, with the exception of On-Balance-Volume and Momentum.
Meanwhile, the Russell 2000 eased further away from channel resistance with a MACD trigger 'sell' as Rate-of-Change remained below the bearish mid-line. It will start Monday at its 20-day MA.
As a final point, the Percentage of Nasdaq Stocks above 50-day MA turned bearish in technicals. Should this spread to other Tech breadth metrics it will confirm an intermediate top.
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Tech indices are the one to watch on Monday. The Semiconductor Index will have its work cut out to recover the prior consolidation, but a rally back to confirm would not be surprising for the coming week. The Russell 2000 is better set up for further losses, although converged 20-day and 200-day MA will be available to lend support on Monday.
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